The Informal Labor Market in Colombia: identification and characterization

In this paper, we study the extent and nature of informality in Colombia by using the new chapter on informality in the Encuesta Continua de Hogares (ECH) from August 2006 to December 2006, which includes new questions deepening the information on coverage of social protection benefits, labor market trajectories, and motivations for sector of employment. The availability of these new data allows us to measure informality in several ways and understand the differences and implications of using various definitions. We show that social security contributions is a reasonable measure of informality as it is a good indicator that the individual has the entire package of benefits associated with formal employment. We then use this definition of informality to characterize informal workers in various dimensions that include socio-demographic characteristics, characteristics of the firm and job satisfaction measures. The main objective is to understand what types of individuals belong to formal and informal sectors, study the incentives and motivations of workers for belonging to one or other segment of the labor market, and analyze the consequences of not being covered by the regulatory framework. In doing this, we hope to gain some understanding about how different policy interventions could influence individuals´ occupation choices and workers´ well-being. In this paper, we study the extent and nature of informality in Colombia by using the new chapter on informality in the Encuesta Continua de Hogares (ECH) from August 2006 to December 2006, which includes new questions deepening the information on coverage of social protection benefits, labor market trajectories, and motivations for sector of employment. The availability of these new data allows us to measure informality in several ways and understand the differences and implications of using various definitions. We show that social security contributions is a reasonable measure of informality as it is a good indicator that the individual has the entire package of benefits associated with formal employment. We then use this definition of informality to characterize informal workers in various dimensions that include socio-demographic characteristics, characteristics of the firm and job satisfaction measures. The main objective is to understand what types of individuals belong to formal and informal sectors, study the incentives and motivations of workers for belonging to one or other segment of the labor market, and analyze the consequences of not being covered by the regulatory framework. In doing this, we hope to gain some understanding about how different policy interventions could influence individuals´ occupation choices and workers´ well-being.Informality, pension, health, job satisfaction

Monetary Policy Rules in Colombia

Este estudio reporta estimaciones de una función de reacción de política monetaria para Colombia durante el período 1991 a 1999. Los resultados indican que durante este período el Banco Central adoptó una regla implícita cuyo objetivo era la tasa de inflación. La evidencia también sugiere que el Banco Central respondió a la inflación anticipada en contraposición a la inflación rezagada. De acuerdo con los resultados, aún bajo la existencia de una banda cambiaria cuyo objetivo era servir de ancla nominal para la política monetaria, el Banco Central tuvo espacio para movimientos independientes de la tasa de interés siempre y cuando la tasa de cambio no se encontrara en alguno de los dos extremos de la banda.Función de reacción de política monetaria, tasa de inflación, tasa de interés, regla de Taylor

MONETARY POLICY RULES IN COLOMBIA

Este estudio reporta estimaciones de una función de reacción de política monetaria para Colombia durante el período 1991 a 1999. Los resultados indican que durante este período el Banco Central adoptó una regla implícita cuyo objetivo era la tasa de inflación. La evidencia también sugiere que el Banco Central respondió a la inflación anticipada en contraposición a la inflación rezagada. De acuerdo con los resultados, aún bajo la existencia de una banda cambiaria cuyo objetivo era servir de ancla nominal para la política monetaria, el Banco Central tuvo espacio para movimientos independientes de la tasa de interés siempre y cuando la tasa de cambio no se encontrara en alguno de los dos extremos de la banda.Función de reacción de política monetaria, tasa de inflación, tasa de interés, regla de Taylor

Changes in the distribution of income and the new economic model in Colombia

This paper has analyzed the changes in the distribution of income in Colombia since 1976 using data for urban economy (seven largest metropolitan areas) and for the manufacturing sector. Evidence is shown that the structural reforms that took place in the early 1990s have been related to higher income concentration in Colombia, where levels of inequality were already impressively high. The results suggest that both trade liberalization and skill complementary technological change have a positive impact on skill premiums. The evidence presented suggests that skill complementary technological change has been a key force behind the recent increase in the relative demand for more-educated workers. Much of the change in skill intensity has taken place within specific industries, rather than involving large reallocations between sectors. Trade reform has not resulted in a greater expansion of skill intensive sectors relative to unskilled intensive sectors. Quite the contrary, trade liberalization and other reforms, which lowered the user cost of capital and relaxed liquidity constraints, facilitated investment in skill complementary technologies within all sectors of production. Further evidence in this direction is provided by the fact that the largest increases in the relative earnings of the more educated workers took place in the non-traded sectors. The results suggest that both trade liberalization and skill complementary technological change have a positive impact on skill premiums. As the evidence presented in this paper shows, the structural reforms have been related to higher income concentration in Colombia, a country with already impressively high levels of inequality. For this reason, a better understanding of the relationship between the reforms and distribution is crucial to assess the future of the full reform agenda. Obviously this process has to be consistent with higher levels of growth, lower poverty and more equitable distribution of income.

Determinants of Labor Demand in Colombia: 1976-1996

Colombia's unemployment rate rose to 20% during the late 1990s from less than 8% in 1994. This paper argues that this has been the result of high non-wage labor costs embodied in the legislation. The estimated own-wage labor demand elasticity is around 0.5, which implies that a reduction in those costs, while politically costly, can have a significant payoff in terms of equity and efficiency. We also find that adjustment costs of changing employment as well as wage elasticities were not affected by changes in the regulations regarding severance payments and dismissal costs. In this sense, structural reforms did have an impact on labor demand through its effect on relative prices alone. Finally, we conclude that the wage elasticity of labor demand increases (in absolute terms) during contractions. Hence, the increase in prices and the beginning of a recession had a significant effect on employment.

Race and Ethnic Inequality in Health and Health Care in Colombia

In this paper we explore race and ethnic health inequalities in Colombia. We first characterize the situation of Afro-Colombians and indigenous populations in Colombia. Second, we document racial/ethnic disparities in health outcomes and access to health care using data from the Living Standards Survey and the evaluation of the Familias en Acción program. Third, we set up a statistical model that allows us to test whether some of the health inequalities that are observed still remain after controlling for a wide range of individual and household observed characteristics, including access to health care. The results indicate that most racial and ethnic disparities in health and access to health care disappear once we control for socioeconomic characteristics of individuals, employment status and characteristics of the job and geographic location among other things. Based on these findings we make some specific policy recommendations aimed at improving the status of racial minorities in Colombia.Salud, Seguros en salud, Raza y etnicidad.Health Outcomes, Health Care, Race and Ethnicity

La importancia de los programas para la primera infancia en Colombia

Este documento presenta evidencia acerca de la importancia de los programas del ICBF destinados a la Primera Infancia (PI), en términos de su alcance, cobertura, beneficios y pertinencia. A la luz de la literatura internacional, se discute la importancia de los programas de PI, la evidencia sobre los impactos de corto y largo plazo, las características de programas exitosos de PI, y las razones por las cuales los retornos a inversiones en capital humano durante la PI son más altos que otras inversiones similares a lo largo del ciclo de vida. Así mismo, se compara el diseño y cobertura de programas de PI en Colombia con programas similares en países en Latinoamérica. Se evalúa a nivel descriptivo la relación existente entre la cobertura de programas del ICBF a nivel municipal e indicadores de bienestar de la comunidad. Por otra parte, se presenta un análisis de la rentabilidad de los programas de PI en Colombia y una comparación de dichos programas con otras inversiones en capital humano en edades posteriores. Para establecer la importancia y relevancia de los programas de PI administrados por el ICBF se presentan algunas simulaciones de los costos en que incurriría el país si no se atendieran los niños que en la actualidad son beneficiarios de estos programas. Como ejercicios complementarios, se presentan también el análisis costo-beneficio del programa Hogares Comunitarios de Bienestar con base en la evaluación de impacto llevada a cabo por la Universidad de los Andes y Profamilia, y la evaluación de los programas del ICBF sobre variables de estado nutricional con base en la base de seguimiento nutricional METRIX.Primera Infancia, cuidado infantil, desarrollo cognitivo, nutrición